Oncology Drug Spending By Health Plans May Rise 50% By 2010 – Medco

Long-term cancer treatment with targeted oral therapies will spur a 46 percent to 53 percent surge in health plan spending on oncology drugs within the next three years, Medco predicts in its 2008 Drug Trend Report (see chart: " ¹ Drug Spending By Health Plans: 2008-2010 Forecast ").

Other contributors to ballooning oncology drug costs are continued growth in the use of combination treatments, as well as new oral drugs and expanding indications for existing drugs, Medco said.

Among the potentially more costly therapies on the horizon are two for idiopathic thrombocytopenic purpura: GlaxoSmithKline's Promacta (eltrombopag) and Amgen's Nplate (romiplostim). Promacta is slated for FDA advisory committee review May 30; Nplate received committee support in March but a sizeable amendment addressing risk management could delay the latter product's application (² 'The Pink Sheet,' May 12, 2008, In Brief).

Medco projects that spending on cancer drugs and transplant therapies will grow 11 percent to 17 percent per year through 2010.

Oral tyrosine kinase inhibitors such as Novartis' Gleevec (imatinib), Pfizer's Sutent (sunitinib), Bayer/Onyx's Nexavar (sorafenib) and Roche/OSI's Tarceva (erlotinib) will drive the trend, the pharmacy benefit manager predicted.

But supportive care therapies, such as erythropoiesis stimulating agents Epogen , Procrit and Aranesp , will "moderate" the oncology growth trend, Medco said. Safety concerns led to a 15 percent drop in plan spending on ESAs in 2007, the report notes.

Medco's trend forecast is based on 2005-2007 drug utilization and cost data collected from health plan clients covering approximately 38 million members. The pool also includes Medicare Part D beneficiaries.

Plan expenditures for cancer and transplant drugs rose 15.5 percent in 2007, as the therapy mix shifted toward newer, more expensive brand name drugs.

Spending in the broader category of specialty drugs continued to grow by double-digits in 2007 - 12.3 percent. However, growth was somewhat slower than in 2006, when it topped 16 percent.

The specialty category accounted for 11.4 percent of all pharmacy spending, which is prompting health plans to look at new ways of managing costs (see ³ (Also see "WellCare Government Membership Up But Costs May Lead To Loss" - Pink Sheet, 19 May, 2008.) ).

Treatments for cancer, autoimmune conditions and respiratory ailments led to the increase in specialty drug costs last year.

Diabetes Drugs Lead All Growth

Diabetes drugs emerged as the leading driver of spending growth in 2007, displacing cholesterol reducers, which have led increases for the past 10 years.

Expenditures for diabetes therapies rose 12 percent due to shifts toward higher-cost treatments, higher brand name pricing and "moderate" growth in the number of patients receiving treatment.

Medco pointed out the increase came despite a sharp (60 percent) drop in scripts for GlaxoSmithKline's Avandia (rosiglitazone), withdrawal of Pfizer's Exubera inhaled insulin and declining unit costs for a number of generic diabetes drugs. Avandia's downturn resulted from safety concerns linking the drug to an increased risk of ischemic events and an expanded black box warning ⁴ (Also see "Profile Of A Drug Safety Scandal: Avandia Appears Headed Down Familiar Path" - Pink Sheet, 28 May, 2007.), p. 5).

Medco forecasts spending on diabetes drugs will increase 8 percent to 12 percent annually through 2010.

Generics Suppress Cholesterol Costs

Cholesterol drug expenditures fell 8.5 percent in 2007, due mainly to widespread use of generic pravastatin and simvastatin.

Lipid-lowering drugs experienced the greatest spending decline of all drug categories last year, despite a nearly 6 percent increase in utilization, Medco noted.

Because cholesterol drugs present such a large portion (10.8 percent) of overall drug spending, the total drug trend for 2007 slowed to a "record low" 2 percent.

Nevertheless, spending on statins and other cholesterol-lowering drugs will grow at the rate of 8 percent to 12 percent annually over the next three years, Medco predicted.

Broader use of cholesterol and hypertension treatments also is helping to push an increase in chronic use medication among insured Americans; Medco reports that 51 percent are now taking at least one prescription drug to treat a chronic health problem. While seniors have traditionally shown the highest prevalence of chronic medication use, younger adults are catching up, the PBM reported.

- Cathy Kelly ([email protected])